Emerging PE Firms Face Fundraising Squeeze in Europe

Europe’s private equity fundraising market is becoming increasingly concentrated among established fund managers, as institutional investors continue to favor firms with proven track records while allocating significantly less capital to emerging managers amid a prolonged period of slower exits and constrained liquidity.

Emerging private equity managers—defined as firms raising their third fund or earlier—have experienced their weakest fundraising environment in at least a decade. So far this year, these firms have closed just 16 funds, accounting for less than one-third of all private equity fund closes across Europe and marking their lowest share of the market in ten years.

The disparity becomes even more pronounced when measured by capital raised. Emerging managers have secured only €3.4 billion (approximately US$3.9 billion) across those funds, representing barely one-tenth of the capital raised in Europe during the period. By comparison, experienced managers have closed 35 funds, attracting a combined €34.1 billion, underscoring investors’ preference for established firms with demonstrated performance records.

The fundraising imbalance reflects a broader shift in institutional capital allocation as limited partners (LPs) navigate an environment characterized by higher interest rates, subdued distributions and a slower exit market.

Private equity exits across Europe have remained below historical averages over the past two years as elevated financing costs and valuation uncertainty have reduced merger and acquisition activity and delayed public listings. With fewer realizations returning cash to investors, many LPs face what industry participants describe as the “denominator effect,” limiting their ability to make new commitments while maintaining target portfolio allocations.

As a result, investors have become increasingly selective, concentrating commitments on managers with established track records, larger platforms and longer histories of generating consistent returns.

The combination of higher-for-longer interest rates and slower portfolio exits has significantly constrained LP liquidity, reducing the amount of capital available for new manager relationships and making re-ups with existing general partners a priority.

The fundraising trend is evident across Europe’s largest private equity markets.

France has become the continent’s most concentrated fundraising market, with experienced managers accounting for 73% of all private equity fund closes since 2021. The United Kingdom follows closely behind, where established firms have represented 64% of completed fundraises over the same period.

The data suggests institutional investors increasingly favor scale, operational experience and established investment teams when deploying capital into European private equity strategies.

Germany, however, remains a notable exception.

Unlike other major European markets, emerging managers in Germany continue to outperform their more established counterparts in terms of the number of funds raised, highlighting the country’s comparatively vibrant entrepreneurial investment ecosystem and continued investor appetite for differentiated strategies.

Among the notable examples is Inseta, which successfully completed fundraising for its entrepreneurship-through-acquisition (ETA) vehicle in April after reaching its €60 million hard cap in just three months.

The fund focuses on acquiring and growing small and medium-sized businesses through entrepreneurial ownership transitions, a strategy that has attracted growing attention across Europe as succession challenges increase among privately owned companies.

Inseta’s leadership team combines extensive private equity and academic experience. The firm is led by four senior partners, including Gernot Eisinger, co-founder of Munich-based private equity firm Afinum; Lukas Krauss, former investment director at Paragon Partners; and Ivana Naumovska, a professor at INSEAD specializing in entrepreneurship and organizational strategy.

Germany has also seen successful fundraising from more established emerging managers. Munich-based Greenpeak Partners reached the €300 million final close of its third private equity fund, increasing the firm’s total assets under management to more than €1 billion.

Greenpeak’s milestone demonstrates that while the broader fundraising environment remains difficult for newer firms, managers with differentiated investment strategies and established execution capabilities can still attract meaningful institutional capital.

The divergence between Germany and other European markets reflects differences in local investor ecosystems and the availability of specialized investment opportunities. Germany’s deep middle-market economy, family-owned business landscape and strong industrial base continue to generate opportunities that appeal to both domestic and international investors seeking niche private equity strategies.

More broadly, the fundraising data illustrates the increasingly challenging environment facing first-time and emerging managers across Europe.

Launching a new private equity platform has become considerably more difficult as institutional investors prioritize existing relationships over building new ones. Many pension funds, insurance companies, sovereign wealth funds and family offices have adopted more concentrated portfolios, reducing the number of manager relationships while increasing average commitment sizes to firms with established performance histories.

This trend has also benefited mega-fund managers, many of whom continue to raise multi-billion-euro vehicles despite the broader fundraising slowdown affecting the private markets industry.

Industry participants expect fundraising conditions to remain selective until exit activity improves meaningfully. A sustained recovery in mergers and acquisitions, secondary buyouts and public market listings would increase distributions to LPs, providing fresh capital that could support commitments to a broader range of managers, including first-time funds and emerging firms.

Until then, experienced managers are likely to continue dominating European fundraising, leveraging their track records, institutional relationships and operational scale to secure the majority of investor commitments.

While Germany demonstrates that opportunities still exist for innovative and specialized emerging firms, the broader European market points to an increasingly concentrated fundraising landscape where established general partners are capturing a growing share of available capital.

For emerging managers, differentiation, sector expertise and strong alignment with investor priorities may prove increasingly important as competition for limited partner capital intensifies across Europe’s private equity market.

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